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1 Becker BEC > B1 > Flashcards

B1 Flashcards

1
Q

primary role of an entity’s board of directors

A
  1. safeguard company’s assets

2. maximize shareholder return

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2
Q

Liability for Unlawful Distributions

A
  • paying dividends when the corporation would not be able to pay its debts as they became due
  • total assets would be less than its total liabilities
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3
Q

limitation on director indemnification

A
  • bad faith

* unethical

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4
Q

Are directors individual agents?

A

no

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5
Q

authority of officers

A

actual and apparent authority

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6
Q

largest change from SOX

A
  • enhanced disclosures
  • audit committee
  • CEO & CFO representations
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7
Q

types of liability for CEO & CFO

A

*civil and criminal liability

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8
Q

CEO/CFO pay for a restatement and must reimburse the issuer if material noncompliance is found

A
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9
Q

principal stockholders

A

> 10% ownership in the company

*related parties

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10
Q

Section 404 of SOX

A

*assessment of internal controls

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11
Q

Who is in charge of enhanced review of periodic disclosures?

A

the SEC

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12
Q

What is the purpose of the COSO framework?

A

to help management obtain an initial understanding of what constitutes an effective system of internal control

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13
Q

Elements of an Effective System of Internal Controls

A
  • more than adherence to policies
  • use of judgment
  • PRINCIPLES-BASED approach
  • should extend beyond financial reporting
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14
Q

Three Categories of Objectives under COSO Framework

A

O perations
R eporting
C ompliance

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15
Q

5 Components of Internal Control

A
  1. Control Environment
  2. Risk Assessment
  3. Existing Controls
  4. Monitoring
  5. Information and Communication
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16
Q

Elements of Control Environment

A 
"EBOCA"
E thics and integrity 
B oard independence and oversight
O rganizational structure 
C ompetence
A ccountability
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17
Q

Risk Assessment Elements

A

“EAR”
E vent ID
A ssess risk
R espond to risk

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18
Q

Monitoring Elements

A

*assessing the quality of internal control performance AND taking the necessary corrective actions

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19
Q

Existing Control Activities Elements

A
  • detective or preventative

* technology controls, control activities, policies and procedures

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20
Q

An effective system of internal controls requires

A

internal controls that are both

PRESENT & FUNCTIONING

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21
Q

major deficiency =

A

may not conclude that it has met the requirements for an effective internal control system

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22
Q

What level of assurance do internal controls provide?

A

reasonable assurance

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23
Q

Enterprise Risk Management definition

A

*balances risks and returns as well as efficiency and effectiveness

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24
Q

Strategic Objectives of ERM

A 
"SORC"
S trategic
O perations
R eporting
C ompliance
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25
Q

Components of ERM (8)

A 
"IS EAR AIM"
I nternal environment 
S etting objectives
E vent ID
A ssess risk
R espond to risk 
A ctivities (control)
I nformation and communication
M onitoring
26
Q

Internal Environment for ERM

A 
"EBOCA HR"
E thical values and integrity 
B oard oversight 
O rganizational structure 
C ommitment to competence 
H uman resources standards
R isk management philosophy 
R isk appetite
27
Q

Two things to look for in event identification

A

POSITIVE AND NEGATIVE events

28
Q

Inherent Risk vs. Residual Risk

A
  • inherent = risk without management action

* residual = risk after management action

29
Q

3 Assessment Techniques for Risk Assessment

A
  1. Benchmarking
  2. Probabilistic Models
  3. Non-probabilistic Models (opinion; outcome of lawsuit)
30
Q

Possible Risk Responses

A
  1. Avoidance (terminate the risk)
  2. Reduction (mitigate; invest)
  3. Sharing (insurance)
  4. Acceptance (no action)
31
Q

How should risk be considered?

A

*on an entity-wide (portfolio) perspective

32
Q

Information Quality Factors

A
  • timely
  • current
  • accurate
33
Q

Monitoring Components

A
  1. ongoing monitoring activities
  2. separate evaluations
  3. reporting deficiencies
34
Q

Measurements of Performance should be both

A

*financial and nonfinancial

35
Q

Total Factor Productivity vs. Partial Productivity

A
  1. (output)/(total costs)

2. (output)/(specific quantity of input)

36
Q

Control chart =

A

*goalpost conformance

37
Q

Pareto Diagram

A
  • histogram

* shows cumulative and most frequent quality control issues

38
Q

Cause-and-Effect Diagram

A
  • fishbone

* used to identify the sources of the problem

39
Q

Characteristics of Effective Performance Measures

A
  • promote the achievement of goals
  • objective and easily measured
  • understood by the employee
40
Q

Marketing Practices and Methods

A
  1. Transaction Marketing - price
  2. Interaction-Based - repeat business/loyalty discount
  3. Database Marketing - segment and target groups
  4. E-marketing - internet
  5. Network marketing - relationships and referrals
41
Q

Performance Incentives & Compensation

A
  1. Sales-volume-driven compensation

2. Customer satisfaction and quality measures

42
Q

Types of Bonus Plans

A

*fixed and variable

43
Q

Cooperative vs. Competitive Plans

A 
Cooperative = stock options
Competitive = commissions
44
Q

Cost Object

A

*the item or process for which a separate cost must be computed

45
Q

Freight in vs. Freight out

A

*inventory/product vs. selling cost

46
Q

Prime Cost

A

DL + DM

47
Q

Conversion Cost

A

DL + MOH

48
Q

Cost Drivers

A

*relationship in which manufacturing overhead will be applied

49
Q

In the long-run, all costs are

A

VARIABLE

50
Q

Types of Costs (behavior)

A
  • variable
  • fixed
  • semi-variable
51
Q

How are costs allocated under job costing?

A

*allocated sequentially as it moves through the manufacturing process

52
Q

Manufacturing Overhead

A

Credit Balance = favorable = overapplied

Debit Balance = unfavorable = underapplied

53
Q

Equation for Production Report

A

BI + Started (Transferred In) = EI + Transferred Out

54
Q

Two types of cost-flow assumptions

A

FIFO or Weighted Average

55
Q

FIFO Equivalent Unit Calculation

A
  1. cost to complete BI
  2. costs added to started and completed
  3. cost in ending inventory

ONLY COSTS ADDED

56
Q

Weighted Average Equivalent Unit Calculation

A
  1. costs in units completed
  2. cost in ending inventory

TOTAL COST

57
Q

Normal Spoilage vs. Abnormal Spoilage

A
  • normal = inventory

* abnormal = I/S - separate component of COGS

58
Q

ABC Features

A
  • multiple activity centers
  • focuses on cost/benefit activities
  • removes cost distortion
59
Q

Split off Costs Allocation Methods

A
  1. volume relationships
  2. net realizable value
    a. known at split-off
    b. not known at split-off
60
Q

By-products

A
  1. applied to main product as a reduction of common costs
    or
  2. miscellaneous income

1 Becker BEC (7 decks)

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